The market has been hinting at weakness on Friday. News of problems with Greek and Italian sovereign debt will probably continue to dominate the headline. The S&P 500 broke below the 50-day simple moving average and is threatening the uptrend line that has been in place since August. We’ve had a series of lower highs and a couple failed bounces, so it looks precarious for the bulls. Unfortunately we are not that far from the top and still far from the typical 10% correction.
On the bright side we did narrowly filled the April 20th gap from last month and found support there for now. Sentiments based on the put and call ratio and 3 down weeks are beginning to favor an oversold bounce. A gap up would probably invite more sellers, so the best thing for the bulls would probably be another lower open to create some fear. Even with the late-day sell off, the agriculture stocks stayed strong into the close. It would be an interest sector to watch if we do bounce.
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